RSM Australia

Fringe Benefits Tax in a COVID-19 world

Tax Insights

The ATO have recently updated the guidance published on their website on the treatment of the provision of certain Fringe Benefits to employees, in light of the current pandemic. Two of the key items covered are:

  • Garaging of cars at employee’s homes and
  • Provision of accommodation, food and transport

Garaging work cars at employee’s homes

Due to COVID-19, employers may have been garaging work cars at their employee’s homes. The ATO have stated that there may not be an FBT liability depending on:

  • Fringe Benefits Taxthe type of vehicle
  • how often the car is driven and
  • the calculation method chosen for car benefits.

Generally, car fringe benefits will arise where an employer provides a car for the private use of an employee. Therefore, if an employee is garaging a work car at home, the employer may be providing them with a car fringe benefit.

The ATO have now released a fact sheet for employers who find themselves in this situation. A summary is provided below:

  • Where the car is not being driven at all (or only being driven for maintenance purposes), the ATO deem that the car is not being held for the provision of a fringe benefit.
  • Where employers choose to use the operating cost method, the taxable value for the car will be nil and there will be no FBT liability.
  • Employers will need to maintain odometer records to show the car has not been used during the period.

However, the statutory method will automatically apply where an employer does not elect to use the operating cost method or does not have odometer records; in this case, they will have an FBT liability for the year.

Logbooks

Fringe Benefits TaxThe ATO has stated that where employers use the operating cost method, they may already have an existing logbook. If this is the case, they may choose to continue using that logbook to make a reasonable estimate of the business kilometres travelled during the year. Employers can also elect to keep a new logbook which is representative of the business kilometres travelled during the year.

Emergency accommodation, food and transport

An employer will not be required to pay FBT on emergency accommodation, food, transport or other assistance to an employee if:

  • the benefit is emergency assistance to provide immediate relief and
  • the employee is, or is at risk of being, adversely affected by COVID-19.

In the context of COVID-19, this would include:

  • Fringe Benefits Taxexpenses incurred relocating an employee, including paying for flights home to Australia
  • expenses incurred for food and temporary accommodation if an employee cannot travel due to restrictions (domestic, interstate or intrastate)
  • benefits that allow an employee to self-isolate or quarantine
  • transporting or paying for an employee’s transport expenses including car hire and transport to temporary accommodation.

Emergency assistance also extends to providing temporary accommodation and meals to fly-in fly-out or drive-in drive-out employees who are unable to return to their normal residence due to COVID-19 domestic and international travel restrictions.

For further clarification on how this may impact you please contact your local RSM tax specialist.


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